The Federal Housing Administration, commonly known as FHA, is a government agency inside the Department of Housing and Urban Development. FHA is responsible for issuing mortgage insurance to lenders who are making FHA-backed home loans. Because FHA loans are backed by the government, lenders can make riskier loans to people with lower down payments.

The mortgage insurance provided by FHA is funded by mortgage insurance payments that borrowers make with their loan. Those mortgage insurance payments are in addition to their regular principal and interest payments.